Usually it goes as follows: we want to accelerate our company we got traction and now it is time for worldwide domination! The enthusiasm awesome, you feel the vibe and with or without funding the founders are ready to rule the world.
We are always in for solving another world problem and make a company bigger than ever…..there are some key elements we go through to see if this is feasible and than adjust.
1. You need the right people, often with all respect the founder and team are not capable to scale FAST. You need specific type of people who are in for the long term to make crazy decisions to make the company grow.
2. You need to take 1 step backwards and analyse what you have, do more research for the right positioning (per region, country) to go for roll out.
3. Make a focused roll out, even with plenty of money in the bank as UBER had, they failed in many areas to quick, to unorganised and basically 9 out of 10 would have gone bankrupt.
4. Being a dominant player in 5 countries can be very lucrative to make another jump and the budget is spend focused on those areas.
5. Do your marketing research and data analytics on the life time value of a user! This is key to succeed. It’s the consumer centric approach, why is this a client, what they like and do not like, image matching the services and the client is critical also for your spendings…….which is even a larger key element.
6. Be prepared to make massive mistakes and be prepared to tweak your business model as also be prepared to prevail speed over efficiency.
Spending of marketing and sales efforts, scaling on personnel…..most companies scale to run out of money and business. Depending on the strategy sometimes a high burn-rate is necessary, unfortunately that doesn’t include excessive lease cars, salaries and buildings. A pre-investment (CAPEX) to increase cashflow and grab marketshare can be a very viable strategy. In the Fintech market….Transferwise and Revolut are good examples. They got now their position and build it out to a sustainable company.
Now the thing that nobody wants to hear….the looooooong game. I refuse all potential companies who are in for Hit and Run. Every company with a vision, descend research and positioning are in for the long term. In the excessive speed of community growth, there are sometimes exceptions we all love. Like Whatsapp, which I consider a quick successful scale up…..but look up the details, it still took 5 years after incorporation (ad some more time) and these are highly exceptional examples. Youtube was a quick one, but don’t forget Google was already involved without people knowing. There is nothing wrong with a scale up who builds a successful business in 5 or 10 years….it’s the looooong game that counts.
I think it is worthwhile to quote Reid Hoffman:
scaling is a specific set of practices for igniting and managing dizzying growth; an accelerated path to the stage in a startup’s life-cycle where the most value is created. It prioritizes speed over efficiency in an environment of uncertainty, and allows a company to go from “startup” to “scaleup” at a furious pace that captures the market.
He says it right there are 3 strategies, Efficient, fast and blitzscaling
What can you handle!